The markets regulator Securities and Exchange Board of India (SEBI) and its banking counterpart Reserve Bank of India (RBI) are discussing a proposal to raise the overseas investment limit for Indian mutual funds by up to 25% since the funds have almost touched the current threshold of $7 billion, three people familiar with the matter said, reported The Economic Times.
Some Indian mutual funds have been buying securities in Alphabet, Amazon, Starbucks and Apple, while investing in other large global funds, are hoping that Indian investors’ appetite for international investments would grow bigger, ET reported.
The Association of Mutual Funds in India (AMFI) has requested to the RBI to raise the limit. The association is also believed to have held meetings with Sebi, which is now in talks with RBI, reported ET.
“The RBI now has to take the final call in permitting additional limits, which it may do once market volatility recedes globally,” said one of the people.
In any issue relating to foreign currency, the RBI will need to issue a circular and then Sebi can permit it after that.
The outstanding limit of $7 billion does not include investments by exchange-traded funds, which have an upper limit of $1 billion where there is still good space for investments.
In May last year, Sebi doubled the overseas investment limit of alternative investment funds (AIFs) to $1.5 billion. The decision was made after consultations with the RBI.
Fund houses including Aditya Birla, Motial Oswal, Axis and Nippon have taken bets on companies like Amazon, Alphabet and Apple, shows Value Research data.